A new West Midlands homebuyer scheme is offering house-hunters the chance to buy a new build property with lower mortgage rates. Barratt and David Wilson Homes have joined the Own New Rate Reducer scheme to offer lower rates to buyers that they say could “see a return of the sub 1% mortgage deal”.
Rate Reducer was launched this month with Halifax, Virgin Money and Barratt Developments in and around Birmingham. It means that for some buyers with a high deposit or equity, they could get rates below 1.89% and even below 1% if they have a lot of equity from their current home.
Barratt Developments has new properties at The Elms in Hall Green, along with Tamworth, Lichfield and Stourport among its houses in the region. It worked alongside Own New to design Rate Reducer, becoming the first housebuilder to launch the scheme.
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David Wilson Homes, which has new homes at Tenchlee Place, Hall Green, Fradley, Tamworth and Hampton in Arden, is also involved in the scheme.
Rate Reducer uses ‘incentive budgets’ that housebuilders offer customers in order to reduce their monthly mortgage payments over a fixed term. It means that if a housebuilder offers a 5% incentive on a home, the Own New Rate Reducer takes this amount and offsets it against the mortgage interest. That in turn reduces a buyer’s monthly mortgage payments.
Buyers can opt to spread the benefit across the first two or five years. It will help buyers as they will reduce how much they fork out on the mortgage every month and also allow them to pay back more of the capital value on their mortgage because the interest charged on the loan is lower.
Own New was set up by Eliot Darcy in 2022, to make mortgages more accessible after the frustrations he encountered when buying his first home. Eliot had a stable income yet struggled to secure a mortgage. He noticed that friends with wealthy parents weren’t suffering the same difficulties, so he set out to change that.
Eliot, Founder of Own New, said: “People can benefit from Rate Reducer whether they have a small or large deposit. For some people who already have equity in their home, it could herald the return of the sub 1% mortgage deal.
“This is just the product to stimulate the housing market and to give more people a helping hand and initial boost to get onto the property ladder or to secure that new home that will give them the extra space they need.
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“Our ethos is to make home ownership and mortgage lending in this country open to more people and we are confident that the launch of the Own New Rate Reducer will achieve that.”
Craig Calder, Head of Secured Lending at Virgin Money, said: “Buying a home is a major life event and this first-of-its-kind mortgage product will help customers feel happier about their big purchase, knowing that they have the certainty of a lower fixed interest rate over the initial period of the mortgage.
“By using the homebuilder incentive budget to offset initial mortgage repayments, buyers can focus on other costs like furnishings and decoration, to make their house a home.”
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Amanda Bryden, Head of Halifax Intermediaries, added thaht this product gave customers more choice in the way they can benefit from builder incentives.
What buyers need to know about the Rate Reducer scheme
As part of the Rate Reducer scheme:
- Lenders will carry out their usual affordability assessment, to check that the purchaser can afford repayments if the interest rate increases once the fixed-term benefit ends.
- Independent financial advice must be sought from a regulated mortgage broker who has completed additional training to access this scheme.
- Home-buyers will be able to compare all the options available to them to make sure they get a mortgage product that is right for them and in their long-term financial interests.
- Own New works closely with each lender. The developer contribution reduces interest payments by at least the same value as the incentive.
Where to find out more about the Own New Rate Reducer Scheme
To access Own New Rate Reducer, teams at Barratt and David Wilson Homes can highlight homes available through the scheme. The home-buyer is then referred to one of a network of specialist mortgage broker partners, who will help progress their application.
For more information on the Own New Rate Reducer visit the Own New website here.
The websites for Barratt Homes here and David Wilson Homes here shows developments where the scheme can be used on new builds in the West Midlands.
